Dollars and sense: Finance students offer Foundation investment advice

University of Louisiana at Lafayette Foundation committee received investment advice Monday from students enrolled in a finance course that’s made more than $143,000 for the University in the past five years.

Students enrolled in Finance 485 in the B.I. Moody III College of Business Administration presented end-of-the-semester portfolio recommendations to members of the UL Lafayette Foundation Investment Committee.

In the course, students manage a stock portfolio for the Foundation, which invests and manages private gifts to the University. Between 2015 and 2016, the Foundation set aside $200,000 for Moody College of Business students to buy and sell securities.

The portfolio’s 41 stocks span all 11 sectors of the S&P 500. Its value has grown by more than $143,000 under student direction – a return of 12.1%. That’s slightly less than the 12.6% benchmark for the S&P, said Tommy Kreamer, a financial analyst and UL Lafayette alum who chairs the investment committee.

“We have been extremely impressed with that,” Kreamer said.

The course – and the college – received a boost when the Maraist Financial Services Lab opened in 2018. The Moody College of Business now offers a minor in investment and portfolio management, and students who complete Finance 485 are Bloomberg-certified. 

A dozen computers equipped with Bloomberg Terminal – a software system used by banks, corporations and government agencies around the world – are the lab’s centerpieces. The service provides real-time stock prices, market news and trading information that enable users to build and analyze portfolios and compare investment strategies.

Bloomberg certification “better positions them when competing with highly sought-after financial services jobs,” said Dr. Linda Nichols, dean of the Moody College of Business.

In Finance 485, students mine the news and data Bloomberg provide as they review existing holdings, appraise potential additions and evaluate economic sectors. They then write reports that outline revenue, earnings and growth estimates.

The dossiers are similar to what a Wall Street analyst might provide a client. The reports supplemented oral presentations students made to committee members on Monday.

“It’s obvious how much time and effort you put into the written report,” Foundation Board of Trustees member Michael Finch told economics major Kenneth Ong following his presentation. “It’s very professional. You could almost put Bank of America on top of it.”

Ong was among 11 students who offered their analysis to committee members Monday. Students reviewed seven stocks that already exist within the portfolio and four potential additions. For each, they recommended whether to hold, sell, buy or not buy.

Senior finance major Andre Stafford reviewed Mondelez International, which is already in the portfolio. He recommended buying additional stock positions in the global food, snack and beverage distributor.

Stafford said, despite worldwide market challenges brought by COVID-19, Mondelez managed to outperform its sector, “which is actually something very surprising.”

“Not too many companies are outperforming their sector, especially at a time like this. So, I think that’s something that kind of makes them stand out,” he explained.

The pandemic, global economic uncertainties, natural disasters and the 2020 presidential election loomed large during Monday’s presentations.

Dakota Robin, a senior finance major, suggested the Foundation hold its position in HollyFrontier, a petroleum refiner. The company is listed among the S&P’s energy sector, which is down overall.

Robin based his recommendation on the company’s slowing stock growth, a decline in net income and continued uncertainty related to COVID-19. But, he reminded the committee that HollyFrontier had once outperformed its sector, and there’s potential for it to do so again.

“It’s definitely something to monitor. But with how uncertain the economy is right now, I lean toward holding. But buying was definitely a factor I did consider for a while.”

Austin Sonnier, a senior finance major, reviewed Hologic Inc., a medical technology company. He advised the committee to buy more stock positions in the company, which produces a quarter to a third of all COVID-19 tests in the United States. That equals about 6 million tests per month.

Hologic recently received a $119 million federal contract that will enable it to produce 25 million tests a quarter, Sonnier said. Though often overshadowed by better-known companies such as General Electric and Seamans, the new contracts “will put their name out there more,” Sonnier said. “They are under the radar right now.”

Altogether, students advised buying three additional stocks, holding four current stocks, buying new positions in three others, and not investing in one. The Foundation’s investment committee will now review the recommendations and decide whether to heed the students’ advice.

Learn more about the Student Managed Investment Portfolio program here.

Photo caption: Remington Mengel, a senior finance major, presents his investment recommendations Monday to members of the UL Lafayette Foundation’s investment committee. (Photo credit: Rachel Rafati / University of Louisiana at Lafayette)

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